Accelerating Bauxite Downstreaming to Boost National Aluminium Ecosystem
The government is prioritising the downstream processing of bauxite to optimise the added value of the commodity and accelerate national economic growth, leveraging Indonesia’s position as the world’s sixth-largest holder of bauxite reserves with 1.2 billion tonnes recorded in 2022. According to the Investment Ministry’s strategic roadmap, global demand for aluminium products is projected to reach 243.98 million tonnes per year by 2050, driven primarily by the transport and construction sectors. In line with the development of the electric vehicle and renewable energy industries, the priority targets for bauxite downstreaming include the production of solar panel components and electric vehicle parts.
Investment in the sector has shown significant momentum. Realisation of bauxite downstreaming investment reached Rp 53.1 trillion in 2025, a sharp increase of 143.58% year-on-year from Rp 21.8 trillion in 2024. This positive trend continued into the first quarter of 2026, with investment realisation recorded at Rp 13.7 trillion, up 6.70% compared to the same period the previous year. Currently, more than a dozen companies are developing production facilities for products ranging from chemical grade alumina (CGA) and smelter grade alumina (SGA) to aluminium ingots, alloys, and anode carbon.
Three of these companies are part of the state-owned mining holding MIND ID: PT Indonesia Asahan Aluminium (Inalum), PT Indonesia Chemical Alumina (ICA), and PT Borneo Alumina Indonesia (BAI). Inalum operates a smelter in Kuala Tanjung, North Sumatra, with an annual capacity of 275,000 tonnes of aluminium. ICA runs the only CGA plant in Indonesia, located in Tayan, West Kalimantan, with a capacity of 300,000 tonnes per year, and is 99.998% owned by PT Aneka Tambang Tbk (ANTM).
BAI, a joint venture between ANTM and Inalum with respective shareholdings of 40% and 60%, has completed the construction of the first phase of its Smelter Grade Alumina Refinery (SGAR) in Mempawah, West Kalimantan. The facility, with a capacity of 1 million tonnes per year, began full operations in 2026. BAI President Director Darwin Saleh Siregar stated that the SGAR is a strategic project designed to close the gap in the national aluminium industry chain by linking ANTM’s bauxite production to Inalum’s smelter. Approximately 60% of the SGA output is allocated to supply Inalum’s smelter in Kuala Tanjung, while the remaining 40% is marketed to other customers, including exports to China and India. Around 5% of the product is also absorbed by the water treatment and chemical industries.
The refinery requires approximately 3 million to 3.2 million tonnes of washed bauxite to produce 1 million tonnes of SGA, with raw materials currently sourced from ANTM’s mining permit area in Tayan, West Kalimantan. Darwin noted that the operation has eliminated Inalum’s dependence on imported alumina and significantly increased the value of bauxite, with alumina prices ranging from US$340 to US$400 per tonne, roughly 10 to 11 times higher than the price of bauxite ore. The MIND ID group is now preparing for the second phase of the SGAR project, which has reached the Final Investment Decision stage. The expansion, located adjacent to the first phase, is estimated to require US$890 million in investment and will double the total production capacity to 2 million tonnes of alumina per year, with commercial operations targeted for late 2028 or early 2029.